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Contributing Author: Kent Yuen
Starting a small business can be a challenging endeavor. Obstacles such as overcoming market competition, barriers to entry, and personal economics affect many businesses.
Surety bonds can play an important role in any small business.
When every last dollar impacts the bottom line of a business, some assurances needs to be put in place. A contract may not be performed for any number of reasons from extensive costs, poor labor, understaffing or a party reneging on an agreement.
The surety bond protects businesses from these outside factors.
A surety bond is a legally binding agreement where one party or business guarantees to another (the obligee) that the third party (the principle) will carry out the terms of their contract.
Surety bonds can be purchased from companies that specialize in surety bonds or insurance companies.
In order to apply, extensive financial information regarding the business along with funding and credit are needed for review. The cost per bond will be determined after information is collected. The business applying for the bond, the types of surety bond, and the location it is purchased in will factor into the cost.
Providing small businesses that do not have a lot of capital with credit and a supportive contract to recoup funding if a business partner or contractor does not fulfill their end helps on many levels.
Small businesses need surety bonds in order to obtain the necessary licenses to carry out their services. Without these contracts in place their business cannot operate. Once this is in place, the business will be able to seek out new opportunities across different industries.
It will enable the business to pursue additional contracts that will help the business thrive.
In addition to contracts with vendors, bonds can also protect a business from liability if one of their staff members does something unlawful.
Customers are more likely to utilize the service of a business that establishes a trust factor with their clientele. Building confidence in your business brand and services is possible by using a surety bond because it shows your business is funded and consumers are protected.
The success or failure of a small business will be determined by a number of factors.
The use of surety bonds helps decrease the possibility of a setback while enabling the business to discover new opportunities for improving their business.
About the Contributing Author:
Kent Yuen is a writer for JW Surety Bonds, a surety agency operating nationwide that is proud to provide financial advice to small businesses. When he is not writing, he enjoys learning more about the impact of financial and economic decisions and how they affect local government policy. Don't forget to connect with Kent on LinkedIn or Twitter.
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